Wednesday, 6 June 2012

Social Security system "is not at risk"

Secretary of State Tomás Burgos
(Photo: lainformació
MADRID (Agencies) The Secretary of State for Social Security, Tomás Burgos, announced at a press conference on Monday that the system could be subject to "significant liquidity tension" over the next few months, probably beginning in July. This, he said, is because of treasury fluctuations related to the way the Social Security system is financed. He added that, if necessary and as a last resort, the Government would have to use its reserve funds to compensate for those fluctuations. It is not unusual for there to be some financing problems every July, as this, and December, are the months when the 'extra' payment to employees are due.>>>In Spain, an annual salary is usually divided into 14 monthly payments. Companies are liable for paying their employees the 'normal' monthly salary, plus the 'extra', and therefore have to double the amount they pay into the Social Security system. Burgos pointed out that the system "pays out every month" but does not enjoy an income in the same way, "so there are times when more resources goes out than comes in." The Government will make use of the system's reserve pension fund (at present amounting to almost €68billion) only as an "interim solution" to the problem, but this does not mean that the system "is not sustainable." There is no need to dramatize, he added, and "it is not at risk."

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